Behind the Scenes: Billionaire Real Estate Investors

Billionaire real estate investors are increasing in number, and flexing their capital muscle through institutional investment, according to new data from U.K.-based investment research firm Preqin. As of May 2017, just 443 members encapsulate what Preqin deems the “Billion Dollar Club,” or institutions that have at least $1B allocated for private real estate investment. But these 443 investors account for 13% of all institutional investors and 84% of all institutional capital. Collectively, these 443 hold $39T in assets under management (AUM). In 2004, the Billion Dollar Club encompassed just 376 members.

“Typically comprising the largest investors in terms of overall AUM, the Billion Dollar Club has seen its ranks swell in recent years, as investors seek the income opportunities, strong returns and low correlation to other asset classes of real estate investments. The scale of Billion Dollar Club investors’ involvement with the asset class affords them a lot of influence in the industry,” says Andy Moyland, head of real estate products at Preqin. “These largest investors are best able to call for greater availability of alternative methods for accessing the asset class, as well as pushing for lower fees, more transparency, and more amenable fund terms. This has an effect on the wider investor universe, as fund managers seek to align their interests more closely with investors.”

Here are a few more Preqin datapoints on billionaire real estate investors:

29% of billionaire institutional investors are in public pension funds, and 22% are insurance companies. Asset managers comprise 15% of the cohort, and the same amount can be found in private sector pension funds.

56% of Billion Dollar Club investors will target core strategy in the next 12 months, making it the most-preferred real estate investment strategy. Value-add investment is second-most popular, with 49% investing this way in the next 12 months. Funds for opportunistic real estate investment will be pursued by 48% of the group.

the Abu Dhabi Investment Authority is the largest institutional investor in private real estate. Preqin estimates its allocation at $50B.

These billionaire real estate investors will undertake more foreign real estate investing this year than other real estate investor groups. 62% will look to invest in European real estate over the next 12 months.